Lawmakers put blame on Fannie and Freddie

Mortgage giants' ex-execs under fire at House hearing

By Alan Zibel
| 2 a.m.Dec. 10, 2008

Former Fannie Mae CEO Franklin Raines (right) testified as other ex-executives from Fannie Mae and
Freddie Mac listened yesterday at a House hearing on the mortgage giants' collapse. <em>Getty Images</em>

Former Fannie Mae CEO Franklin Raines (right) testified as other ex-executives from Fannie Mae and
Freddie Mac listened yesterday at a House hearing on the mortgage giants' collapse. Getty Images

WASHINGTON 
Three months after the government seized control of Fannie Mae and Freddie Mac, lawmakers yesterday blamed former top executives at the mortgage giants for fueling the financial market turmoil that has dragged the country into a recession.

And the housing fallout continues. The National Association of Realtors' index of pending U.S. home sales beat expectations in October - but deeply discounted foreclosures and distressed sales accounted for nearly half the deals.

At the same time, the World Bank forecast that the world economy is on the brink of a rare global recession. World trade is projected to fall next year for the first time since 1982 and capital flows to developing countries are predicted to plunge 50 percent.

Internal e-mails and other documents released by the House Oversight and Government Reform Committee show that former Fannie Mae Chief Executive Officer Daniel Mudd and former Freddie Mac CEO Richard Syron disregarded recommendations that they avoid riskier types of loans.

“Their irresponsible decisions are now costing the taxpayers billions of dollars,” said Rep. Henry Waxman, D-Los Angeles, chairman of the committee, which reviewed nearly 400,000 internal documents from Fannie and Freddie.

Republicans argued that the primary causes of the financial meltdown were weak government regulation of Fannie and Freddie and Clinton administration policies to promote homeownership.

Democrats acknowledged that the two government-sponsored companies contributed to the financial crisis. But they stressed that Wall Street banks